CoinEx sees 316x trading volume increase amidst allegations of wash trading

CoinEx, an exchange previously known mainly for Bitcoin Cash [BCH] trading pairs, has surpassed Binance in daily trading volume. The trading volume for Bitcoin [BTC] alone is almost 10 times the volume of Binance, with a 21.83% volume in trading.

However, Redditors seem to find something strange about the sudden jump. From a trading volume close to $5 million, the exchange suddenly jumped to a trading volume of $1.58 billion, marking a 316x increase in just 48 hours.

The jump also coincides closely with the introduction of trade driven mining and dividend distribution on the platform. The CoinEx team recently announced that they would be releasing 3.6 billion CoinEx Token [CET] to be allocated to the users of the platform. In their official blog, they said:

“We will calculate 100% of our transaction fee income into CET against the real-time rate and give them away to all traders proportionately to their trading volume.”

The “mining” of this coin will be conducted through trades and is said to be one of the ways for exchanges to increase their trading volume. As user chrimata on Reddit pointed out:

“So far the exhanges that have been doing this are hyping up the volume for a few days to attract buyers for the token. It makes it look like sweet profits from fees just for holding it. A few days later the volume drops off for some mysterious reason. All of a sudden the fees dry up and a bunch of people bought a token that doesn’t do much. This isn’t the first exchange this week to “pass binance’s daily trading volume” at the same time they are offering this type of token.”

Several users have also pointed out that the volume may be artificially inflated using wash trades. Wash trading is the process of buying assets through one member on the platform and selling them through another. This can easily be automated using programs known as washbots.

Even though this is a loaded allegation, as wash trading is illegal, the coincidence of the trading token being released and the trading volume going up is causing worries for traders. User ImReallyHuman on Reddit said:

“Coinex can do their own wash trades(i.e. not legit volume) in which case there is no exchange fee. It is free (no cost) for Coinex to increase the volume metric to whatever they want at no cost. The volume metric is just a number in the database of the exchange, There is no way to verify it and the exchange can change that number to whatever they want. That number is then polled by coinmarketcap without any verification. The incentive to change your own volume is that it gets everyone talking about them.”

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